(Reuters) – A federal judge temporarily blocked bankrupt Voyager Digital from completing a proposed $1.3 billion sale to cryptocurrency exchange Binance.US on Monday, giving the U.S. government more time to challenge the deal Appeal of legality.
The U.S. Attorney’s Office for the Southern District of New York and the U.S. Trustee’s Office, the Department of Justice’s (DOJ’s) bankruptcy watchdog, approved the sale in early March in bankruptcy court.
They argue that these protections could rubber-stamp transactions in crypto tokens that may be unregistered securities and that may be illegal under U.S. securities laws.
U.S. District Judge Jennifer Rearden of Manhattan ruled on Monday to put the sale on hold, rejecting an argument that Voyager’s delay could lead to Binance.US pulling out of the deal entirely.
Binance.US and Voyager did not immediately respond to requests for comment late Monday.
Voyager, which filed for bankruptcy in July, said in court filings last week that the Justice Department appeal should not be allowed to “encumber” the company and its customers in a legal process of indeterminate duration.
Binance.US has agreed to pay Voyager $20 million in cash and accept deposits of crypto assets from Voyager customers. Those assets, worth $1.3 billion in February, accounted for the majority of deal valuations, according to Voyager data. The Futures Trading Commission (CFTC) filed a lawsuit accusing Binance.com of operating an “illegal” exchange and a “sham” compliance program.
Binance.US has publicly stated that it is completely independent from Binance.com, operating as the “US partner” of the world’s largest cryptocurrency exchange.
The CFTC disputes this in its lawsuit, saying that Binance personnel “decided the corporate strategy, launch, and early operations of Binance.US” and are on an ongoing basis with the Binance-controlled company BAM Trading. Relationship CEO and Founder Changpeng Zhao.
